Reuters: Bankruptcy News: S&P says European corp debt impacted by defaults up 300%

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S&P says European corp debt impacted by defaults up 300% Mar 25th 2013, 14:00 By Josie Cox Mon Mar 25, 2013 10:00am EDT LONDON, March 25 (IFR) - The amount of debt affected by European corporate defaults in 2012 was almost 300% higher than the quantity impacted in 2011, S&P said on Monday, pinning the cause on the lingering peripheral crisis and related macroeconomic headwinds. A report published by the agency showed that USD19.7bn of debt was impacted by corporate defaults in 2012, but although this is significantly higher than the USD5bn affected in 2011, it is still dwarfed by the USD38.7bn impacted in 2009. According to the agency, the annual corporate speculative-grade default rate in Europe was 2.22% in 2012, up from 1.57% in 2011 and 1% in 2010. In 2009, however, the rate peaked at 7.68% in the wake of the global financial crisis, claiming victims including General Motors, CIT Group, General Growth Properties, Harrah's Entertainment, Eddie Bauer Holdings, Pier 1 Imports and Clear Channel Communications. A total of nine companies that S&P rated, including two confidentially rated entities, defaulted on their debt in 2012. Among those nine were directories publisher Hibu PLC, previously known as Yell Group PLC, Switzerland-based refiner Petroplus Holding, Sweden-based bus service provider Nobina, and Germany-based packaging manufacturer Kleopatra Lux. Strategists Diane Vazza and Jacinto Torres also pointed out that downgrades were prevalent in 2012, particularly in the financial sector. "This is partly related to the sovereign downgrades in the region," they said. In 2011, downgrades among financial companies outpaced upgrades nearly 7 to 1, while downgrades exceeded upgrades for non-financial companies by about 2 to 1. "This change in trend reflects the increased volatility in the financial sector in Europe in recent years," Vazza and Torres said. Last week, S&P already published some research which predicted that European speculative-grade default rate would remain high in 2013 but that credit conditions are improving as the leveraged buyout debt hangover from 2006-2008 runs its course. Link this Share this Digg this Email Reprints

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